Author Question: If the price of beef jerky rises, the substitution effect due to the price change will cause A) ... (Read 150 times)

jwb375 · **on:** Jun 29, 2018

If the price of beef jerky rises, the substitution effect due to the price change will cause

A) an increase in the demand for hot sauce, a complement for beef jerky.
B) a decrease in the quantity of beef jerky demanded.
C) an increase in the quantity of beef jerky demanded.
D) an increase in the demand for beef jerky.

Question 2

Why don't the winners from free trade win the political argument?

What will be an ideal response?

katheyjon · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

B

Answer to Question 2

Trade restrictions are enacted despite the inherent inefficiency because of the political actions of rent seeking groups, which fear that foreign competition might have a negative impact on their industry, firm, or jobs. The anti-trade groups are easily organized and have much to gain from trade restrictions, whereas the vast millions of consumers, who would win from free trade, are difficult to organize because each individual has only a small amount of loss when trade restrictions are imposed. Hence the winners from trade restrictions frequently out-lobby the winners from free trade.